Fix the problem

May 16, 2007

The state of Maryland should hang a sign outside the office of its Minority Business Enterprise certification program that reads: Entrepreneurs with political or professional connections need not apply. That might seem extreme, but the program that has helped minority-owned companies reap more than a billion dollars annually in state contracts should primarily serve startups and small firms that need the help to compete against the big boys.

The state's MBE certification program has come under scrutiny because of its 2005 certification of a company that was co-owned by a well-known Republican strategist. In vying for a piece of a $110 million technology contract, Isis Technology Consulting LLC received its MBE certification through a fast-track process. A report in The Sun about Isis's MBE certification prompted the state transportation secretary to order an audit of the fast-track approval process, which had resulted in the certifications of 370 companies over the years.

The audit, which reviewed a sample of fast-track approvals from 2001 to 2006, found a lack of written criteria for certifications and little or no documentation for decisions. The review also raised questions about the role of certification committee members in decision-making and called for an expanded audit of the entire MBE certification program.

Transportation Secretary John D. Porcari characterized the certification of Isis, which was co-owned by Carol L. Hirschburg, as a "cynical manipulation" of the process. The state official who approved the company's application told auditors that he had mistakenly certified the company. That sounds like a convenient excuse, but it also may suggest other influences were at work and that should be a focus of the larger audit.

While the program does have limits on personal net worth and company earnings, it's up to MBE investigators to affirm those limits, and certification decisions should then reflect that. The integrity of the program also depends on diligent compliance reviews.

The state's MBE program has been in business since 1978. Today, 3,261 firms are certified minority or disadvantaged. And in the past six years, at least 275 companies have graduated, meaning their worth has exceeded the program limits.

So, after all this time, is the program still needed? A state study in 2006 suggests that it is: Minority and disadvantaged businesses account for a third of the marketplace, but they received less than 15 percent of state contract dollars. That's a compelling reason to support Mr. Porcari's decision to mend the program, "not end it."